Markets moved higher ahead of this week's US Federal Reserve meeting, but UK chip designers missed out on the rally.

Arm dropped 32p to 830p on growing concerns about increased competition from rival Intel, while Imagination Technologies lost 10.7p to 304.7p despite announcing a licensing deal with US semiconductor group Cavium.

Analysts believe Intel could increasingly make inroads into Arm's smartphone market, which Arm's move into servers may not be able to make up. Analyst Nick James at Numis cut his target price from 920p to 700p and his recommendation from hold to reduce. He said:

Intel has made a breakthrough in finally having competitive chips for smartphones and tablets against Arm based competitors and it could have a period of leadership. At the same time the landscape of credible Arm based mobile apps processor vendors appears to be dwindling. Combined these dynamics cause us to review our market share assumptions, increasing our forecast share for Intel in the smartphone/tablet markets and reducing the assumed Arm share. This combined with updated foreign exchange assumptions drives 10%/12%/12% downgrades to earnings per share in 2014, 2015 and 2016 respectively. We also note our second quarter estimates are below consensus largely due to lower PD royalties, where we forecast a 14% sequential decline (from fall off of strong Apple and other smartphone chip builds in the third and fourth quarter), whereas consensus looks too optimistic with just a 3% sequential decline.

We cut base case forecasts of Arm's CPU share in smartphones to 72% from 86% in 2014 and beyond. Our current thinking is that the balance of 28% goes to Intel, however we believe there are scenarios where Intel could gain up to 40% share if it managed to enable some breakthrough devices at the likes of Sony/Amazon/Motorola, all of which have strong brands and distribution.

Since an investor day on 22 May, Arm shares have lost around 22% of their value.

As for Imagination, its shares were hit by a downgrade from Barclays which moved from overweight to equal weight with a 300p price target.

Overall the FTSE 100 finished 22.23 points higher at 6330.49 as fears eased that the US Federal Reserve meeting could see an easing of its bond buying programme, one of the central bank planks supporting the market in recent months. Michael Hewson, senior market analyst at CMC Markets, said:

After four consecutive weeks of declines Europe's markets have started the week on the front foot ahead of this week's potentially market moving Fed meeting. Markets are assuming that this week's meeting could well see the Fed lower its economic forecasts in line with recent independent expectations from the IMF, World Bank and OECD, and if they do so it would make it much less likely that we will see any prospect of [easing] any time soon.

Vodafone added 2.65p to 182.7p on renewed hopes of consolidation in the mobile sector. This followed reports AT&T was interested in Spain's Telefonica but had been rebuffed, although this was subsequently denied. Vodafone itself is said to be preparing an increased offer for Kabel Deutschland.

Elsewhere Resolution rose 8p to 283.1p following news that JP Morgan had raised its target price on the insurer from 273p to 302p, albeit with a neutral rating:

Legal and General lost 0.3p to 170.6p despite unveiling a new finance director after almost a year of searching.

Since Nigel Wilson moved from the role to become chief executive, L&G has had an interim finance director in the form of Wadham Downing. Now Mark Gregory, a 15 year L&G veteran who is currently head of its savings business, will take on the role with effect from next month. Reports earlier this month suggested regulators were not happy with L&G's initial suggestions for the role.

Reckitt Benckiser jumped 100p to £46.79 after a positive note from Citigroup on the Cillit Bang maker. The bank issued a buy note, saying the company's pharmaceutical business was trading at less than half its potential value. It said:

We are buyers of Reckitt for the recovery of its core business and for its potential in consumer health. However, we also think [the pharmaceutical business] is under-valued by the market, particularly in light of its early resilience to the recent entry of generic competition in the US Suboxone market.

But Associated British Foods fell 50p to £17.32 as Nomura moved from neutral to reduce. The bank cut its 2014 earnings per share forecast by 12% to reflect a more volatile outlook, especially in sugar. It also pointed to a possible slowdown at Primark:

The stock outperformance over the past 18 months has relied mostly on a re-rating of Primark based on the 7% like for like sales growth in the past three quarters and some margin recovery. This performance boom was owing to the deflationary cotton price and US dollar weakness. With cotton and foreign exchange trends reversing now, this implies slowing like for likes and contracting margins. Space growth is limited by unique store requirements.

Petrofac lost 36p to £12.88 after a second profit warning in less than six months from oil services peer Saipem.

Among the mid-caps WS Atkins added 12.5p to 950p after Jefferies raised its price target on the engineering and consultancy group from 900p to 950p. Analyst Justin Jordan forecast further restructuring at the company, with disposals and bolt-on acquisitions:

Following WS Atkins' decision to write down the carrying value of its intangible assets to zero with its 2013 [results], we view [the loss making US business Peter Brown] as a precursor for closure or disposal of the business in late 2014.

Whilst recent disposals demonstrate progress to achieving Atkins stated 8% operating margin target, with the shares up 23% so far this year, we believe more dramatic action in terms of possible M&A or cash return is required to sustain the investment case from here.

They fell 1.7p to 92p while the nil paid rights shares dropped 1.8p to 6.6p. UBS analyst Alex Brignall issued a neutral recommendation on the shares, cutting his price target from 122p to 100p.

Finally APR Energy, the temporary power supply company, added 70p to 910p after it announced a 200MW expansion of an original 250MW contract in Libya. Numis said:

[This expansion] makes it the single largest contract ever signed in the fast-track power industry. The turnkey power solution will help cover anticipated power demand during the critical summer high heat season, as well as provide interim power while the country continues to rebuild and improve its infrastructure. We believe the increased business will underpin our forecasts for 2014 and remove some of the earnings risk perceived by the market. This should outweigh increased contract concentration risk as around 30% of group capacity will be with one customer. We retain our price target of £10.83.